BRPD Circular No. 14: Incentives to Good Borrowers

BRPD Circular No. 14 Banking Regulation and Policy Department Bangladesh Bank Head Office Dhaka. 18 June 2020 BRPD Circular No.-14 Date:---------------------- 04 Asharh 1427 Managing Director/Chief Executive All Scheduled Banks operating in Bangladesh Dear Sir, Regarding incentives to good loan/investment borrowers. Reference is drawn to your attention to BRPD Circular No.-04 dated 16 May 2019 on the subject cited above.

2. Through the aforementioned circular, instructions were previously issued to identify good loan/investment borrowers, stating that for current/demand/term loans/investments, a minimum 10% rebate (interest) benefit must be provided against the interest/profit paid on the relevant loan/investment of the good borrower for the last 12 months ending in September of each year (i.e., from 01 October of the previous year to 30 September of the current year). Now, with the maximum interest rate on loans/investments being determined effective from 01 April 2020 through BRPD Circular No.-03 issued on 24 February 2020, it has been decided that any customer considered a good loan/investment borrower according to BRPD Circular No.-04/2019 will be eligible for the rebate up to 30 September 2019. However, banks must continue the program of identifying good loan/investment borrowers. In this context, the following matters will apply for identifying good loan/investment borrowers and providing them incentives:

3. Every year by the end of December, good loan/investment borrowers must be identified following the criteria below: a) If a current loan/investment borrower's loan/investment account remains in non-classified-standard status until December of the current year and the immediately preceding 4 quarters, and transactions in the said loan/investment account are satisfactory according to the sanction/renewal letter, the relevant customer will be considered a good loan/investment borrower. b) If all demand loans/investments of a demand loan/investment borrower are combined in non-classified-standard status until December of the current year and the immediately preceding 4 quarters, the relevant customer will be considered a good loan/investment borrower. c) If all installments of a term loan/investment borrower's loan/investment account are paid regularly within the fixed dates of the last 12 months and remain in non-classified-standard status for the immediately preceding 4 quarters, the relevant customer will be considered a good loan/investment borrower. d) If a loan/investment borrower has multiple loans/investments, the relevant loan/investment borrower will be considered a good loan/investment borrower only if the aforementioned criteria are met for each loan/investment. e) In all cases, if a customer or their interest-related institution has classified loans/investments in bad status in any bank for the last 12 months, the said customer will not be considered a good loan/investment borrower. f) If a loan/investment account is regularized through rescheduling/restructuring for the first time due to joint reasons, the said loan/investment borrower may be considered a good loan/investment borrower subject to compliance with the aforementioned criteria.

Page 02/02

Page-02

4. If a customer is identified as a good loan/investment borrower according to the criteria mentioned in clause 03 of this circular, the following instructions must be followed: a) Information on loans/investments of good loan/investment borrowers must be reported to the Credit Information Bureau (CIB) as Good Borrower. b) Banks may publish special booklets/magazines featuring the photos, profiles, etc., of customers identified as good loan/investment borrowers for a period of three years or more. In the case of the first publication, if the number of good loan/investment borrowers is large, priority will be given to including the names of those loan/investment borrowers who will be identified as good loan/investment borrowers for a relatively longer period. c) Banks may take measures to honor and award good loan/investment borrowers through annual ceremonies.

5. These instructions will take effect immediately. As a result of the issuance of this policy, all previous instructions related to this matter issued earlier will be considered repealed.

Yours faithfully, (Md. Nazrul Islam) Deputy Governor Phone: 9530252